The planned merger between daily fantasy leading operators DraftKings and FanDuel is off, the companies announced Thursday.
It’s an abrupt end to a deal that many viewed as the best path forward for both companies
After several years of heated competition and legal scrutiny, DraftKings and FanDuel announced plans to merge in November. The combination of the two biggest companies in the rising daily fantasy market drew scrutiny from the Federal Trade Commission.
In June, the FTC and attorneys general from California and the District of Columbia filed suit to block the merger.
DraftKings and FanDuel filed legal briefs this week to answer the complaint, but announced Thursday that they would no longer pursue the merger.
“FanDuel decided to merge with DraftKings last November, because we believed that this deal would have increased investment in growth and product development thereby benefiting consumers and the greater sports entertainment industry. While our opinion has not changed, we have determined that it is in the best interest of our shareholders, customers, employees, and partners to terminate the merger agreement and move forward as an independent company,” FanDuel CEO Nigel Eccles said in a statement. “There is still enormous, untapped market opportunity for FanDuel, and we will continue to execute our strategy to grow our business and further expand the fantasy sports industry.”
DraftKings CEO Jason Robins said in his statement announcing the merger had been terminated that calling off it off was in the best interest of everyone involved.
“…we believe it is in the best interests of our customers, employees, and investors to terminate our agreement to merge with FanDuel and move forward as a separate company,” the statement said.
Sources following the attempted merger closely were not surprised by Thursday’s decision.
“If everyone is being honest with themselves, the merger was off the second the FTC’s decision was announced,” a source with close ties to the companies and CEOs told ESPN. “Both companies can use the money that would have been spent on litigation on government affairs. I’m obviously biased, but I think it is a sign of their maturation. Rather than burn a pile of cash with little to show for it, use the money to continue to shore up any remaining concerns about legality in key states.”
–ESPN Senior Writer Don Van Natta contributed to this story.